China feels the heat…

According to Reuters, China’s banks ratcheted up lending in the last month of 2011 on the back of stronger money supply, reinforcing perceptions that the central bank is gently easing policy to cushion the impact of the global economic slowdown.

“The policy easing signal is becoming clearer,” said Wang Hu, an economist at Guotai Junan Securities in Shanghai. “We think the central bank will continue to loosen credit in the coming months.”

The stronger-than-expected lending and money supply figures suggested that Beijing is firmly on track to unveil more pro-growth steps as inflation eases, which reduce the risk of a hard landing in the world’s second-largest economy.

China’s once turbo-charged economy is on track to slow for a fourth successive quarter as global demand slackened. China’s annual GDP growth in the fourth quarter may have slowed to 8.7 percent from the 9.1 percent, according to the latest Reuters poll.